Robert Samuelson Misuses the Euro Crisis to Advance His War on the Welfare State

Monday, 05 December 2011 05:45

A newspaper that doesn't fact check its news articles can hardly be expected to fact check its opinion pieces. This mean that Robert Samuelson can get away with just about anything he wants in his column.

Today it is a diatribe against the welfare state. He tells readers that the euro crisis is the grand reckoning of the welfare state. Now that the euro zone economies are growing slowly and have aging population, the welfare state is no longer sustainable.

If the Post had fact checkers, they would ask Samuelson why, if the problem is an excessive welfare state, the countries with the most generous welfare states appear to be doing just fine. If we just take the measure of spending relative to GDP, the leaders would be countries like Sweden, France and Denmark, all of which are surviving the crisis reasonably well. None of the crisis countries rate near the top of the list and Spain is an outlier in Europe for having a much lower than average share of government spending in GDP.

A fact checker would have reminded Samuelson that the crisis came about because out of control lending by bankers who somehow could not recognize the huge housing bubbles in the United States and much of Europe that created the largest asset bubble in the history of the world. This is a story of a broken private sector and/or too little government regulation.

The immediate problem facing the euro zone countries is too little demand, the exact opposite of the problem that Samuelson is blaming, which is too much demand and too few resources. (Lesson for reporters: the bloated welfare state story is too much demand chasing too few resources. The problem today is too little demand chasing too many resources, hence the mass unemployment. Remember this one and you are head of 99 percent of your peers.)

turning his statement on its head may actually come true- that the welfare state will be the grand reckoning of the euro crisis- that is, for the peripheral countries to enact legislation for the welfare of their citizens, they may have to withdraw from the euro and reestablish a sovereign monetary supply

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What Would a Fact Checker Check if a Fact Checker Could?, Low-rated comment [Show]

...written by Blissex,
December 05, 2011 9:58

«Now that the euro zone economies are growing slowly and have aging population, the welfare state is no longer sustainable.»

If this were true in a physical sense, he is really saying that it is inevitable to let the poor die of hunger and the sick die of illness in the streets because there are insufficient resources to provide sufficient food and medicine for everybody. Sort of lifeboat or andean planecrash economics.

Or perhaps he is talking about not the end of the physical possibility of social insurance but the end of its political feasibility.

As to the latter he may have a point: that with reduced incomes the middle classes will have a harder choice between a new car every few years or prep classes for university admissions for the kids and paying for losers not to die in the streets and will rather have a new car every few years or invest in prep tutoring to get their kids that all important admission to a major university.

Which would be a rollback to the 19th century, surely welcome to Samuelson's class. As one author recently wrote in 19th century London it was part of the culture of the times to have:

http://www.antipope.org/charlie/blog-static/2011/10/a-cultural-experiment.html#comment-214405 «piles of emaciated corpses in the parks of London every winter during major economic recessions»

I guess that contemporary middle/upper classes may well prefer those piles, however annoying they may be, to an even more reduced lifestyle for themselves, as the middle/upper classes of the 19th century did.

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...written by kharris,
December 05, 2011 11:23

That old Southern European labor-unionist Bismark was the first to institute a government pension scheme in Europe, and look at the wretched state his country is in now!

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...written by spense,
December 05, 2011 11:49

Samuelson says:

The great expansion of Europe’s welfare states started in the 1950s and 1960s, when annual economic growth for its rich nations averaged 4.5 percent compared with a historical rate since 1820 of 2.1 percent...from 1973 to 2000, growth settled back to 2.1 percent

Interesting that the highest growth occurred when income was most equally shared. Is there no lesson to be learned from this? Maybe it's not the lesson Samuelson wants to learn.

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"God is subtle but he is not malicious." Einsteinwritten by diesel,
December 05, 2011 11:58

The wonderful thing about "piles of emaciated corpses in the parks...every winter during major economic recessions" is that the ensuing stench affects and plague germs infect the Rich and Poor alike.

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Don't know why I even read this anymorewritten by joe,
December 05, 2011 1:55

You can't talk about europe without mentioning that it's a monetary union but not a fiscal union. Meaning each country is a currency issuer (like US states are). In the US richer states subsidize poorer states to keep imbalance from causing trouble. This mechanism is missing in Europe. Germany wants to be a net exporter but that means someone else has to be a net importer. It has absolutely nothing, nil, zilch, zero, to do with the welfare state. But it will be used as propaganda to dismantle it.

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___written by joe,
December 05, 2011 1:59

I meant each european country is a currency USER.

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The Second Age of Yellow Journalism strikes again!written by Wisdom Seeker,
December 05, 2011 4:05

Readers, since the media editors no longer require even minimal journalistic integrity, it is up to you to note which writers lie to you, and put them on your "ignore" list. ("Errors" get "corrections" - lies do not.)

This is the scientific feedback loop, after all: researchers whose work is disproven, or cannot be replicated, lose credibility and fail. Truth is given a better chance of emerging from the cacophony of self-interested spin.

In the past, both the media and the political parties had a sense of shame, expelling individuals who dishonored the organization. But in today's Second Age of Yellow Journalism, that job is now up to you. Good Luck!

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The FRB can't guarantee European debtwritten by Scott Peterson,
December 05, 2011 10:44

Your column "If the ECB won't save the eurozone, the Fed must step in" is sheer lunacy. The FRB has no legal power to guarantee the debts of a foreign sovereign.

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...written by Blissex,
December 08, 2011 6:08

«If the ECB won't save the eurozone, the Fed must step in" is sheer lunacy. The FRB has no legal power to guarantee the debts of a foreign sovereign.»

I only noticed this a bit late, but it made me chuckle evilly indeed.

Sure the Board in theory (in practice it can do anything it wants of course) cannot guaranteed the debts of a foreign sovereign, but USA banks can, and have done so, by selling massive CDS quantities to the European banks that bought the Eurozone sovereign bonds.

So if the Eurozone blows up all those European banks just phone Citi and AIG and tell them to wire a lot of money, and then the USA banks blow up.

So the Board does have a rather pressing interest in Eurozone matters. After all they weren't supposed to regulate USA banks :-).